Renovating the House
Yes we have just renovated Parliament House or rather the ALP has found it won’t sell at the forthcoming election auction shortly & hence some renovating was required. The Lifestyle Channel has been very successful with its programmes on selling houses after a makeover. Will it work for the ALP?
The owner of a house up for auction or sale is always very aware of the cosmetics they have applied to improve the selling price. So too we very aware of the cosmetics the ALP has applied to win the next term.
The owner of a house up for sale is also very aware of the problems that still exist & which are frequently structural & too expensive to fix. In many cases the house owner is keen to move & accept a lower price. However the ALP is not keen to move so do we accept a lower price.
The cosmetics have not changed the fact that underneath nothing has changed. There is still the belief that big government can do better with your savings than you can. That is the core structural problem.
It is being recognised elsewhere that at some time you must life within your means e.g. UK where they have had to bring in austerity measures after finding the rot left by the previous Brown & Blair Labour governments.
Do we want to the ALP to continue & produce the same rot as the Euro zone & the PIIGS have done. They have completed a list of failures & flip flops & they hope that Kevin Who will take it with him as he moves to the backbench & that all will be forgotten & forgiven.
Thus the ALP needs to make some structural improvements. They have trotted out many times that they saved the country from recession & saved 200,000 jobs. Where did they find that number & did they save the sale.
The structural changes need to focus on both sides of the balance sheet. I.e. in reducing the government spending & government waste & downsizing big government. They tried the taxx increase e.g. RSPT to pay back the stimulus but business & mining & you & I said there is nothing left for you to take. Enough is enough. Hence the renovation was required.
Governments in any form must do what a family must do i.e. Increase the income & reduce expenditure so as to live within ones means. This is the structural & in fact philosophical change that needs to be done. We don’t believe it is in the ALP makeup or other parties to do so. They have tried & not necessarily given up on the increase to their income & taxx take.
It also came out this week that Tony has a 710K mortgage which for whatever reason he forgot to declare. Maybe the compliance from Big brother was too big for him. Welcome to the real world. Tony certainly needs our help & needs a structural change.
His interest only mortgage will cost him $60,000p.a. which means no principal reduction?
His taxx on say 200K is say $74,000
So he has $66,000 left to live on
That’s the same struggle which most families have.
He needs our help & a structural change. Yes Tony is well off as his business expenses & superannuation are paid by yes the government. However does he have enough time to pay off that large debt? Welcome to the club Tony where many have huge debts & will need their super to pay it off when they retire or are ‘chopped’ to the back bench. When this occurs they have less super & hence even more reliant on the pension.
We only recently have had cries for help from a 60 year old with a $450,000 mortgage. How many such mortgages are on banks asset ledgers & considered prime & low risk. At some time Tony & others will realise that the bank is a very expensive landlord & hence the awaited deflating of house prices. Rental investors in the 60 year club will realise the income from their renter is insufficient & sell & lower prices will occur.
Thus we will see the structural change that needs to occur.
We suggest that many families are paying too much in taxx & mortgage to the bank. There is a structural change that can be made & it costs not to make that change. It reminds us of the analogy of the frog in boiling water. If it is cooked slowly it isn’t aware that it is being cooked.
Let’s improve yours or Tony's lifestyle as our active wealth strategy does for others
Welcome to call on 3848 1088 or email or book via our websites. Tony our lines are open & Kevin Who we may help you with your redundancy package.
John McAuliffe
It’s party time
It’s party time
Yes that’s why they are called parties. Life is a party if you are the pied piper of a political party. They are having a great time outdoing each other in showering the masses or is it the press gallery with gifts & snippets. It is the old game of ‘ours is bigger than yours’. They are also having a great time throwing mud at each other.
In fact with a sergeant at arms of a bikie gang on the cover of The Weekend Australian magazine recently there could be some similarities. Maybe these parties could be called gangs. We recall there was a so called ‘gang of four’. Could we have some state legislation to ban these gangs or parties from assembling in greater numbers than one? After all taxx is taken & allocated [wasted] in ways that you probably don’t agree with.
Hence we suggest to the ‘working family’ who needs to ‘move forward’ to read a recent email to us
Hey there John,
Anyways, yes, we have some small actions - I have asked my mother to move out of Mt Ridge, now I am doing a few odd jobs to fix the place up for renting - hopefully ready by end of Aug / Sept.
Am STILL working on my June BAS - naughty naughty - it was due 28/07, but our accountant tells me I have a week or so to get it to her.
We have put the feelers out to sell Tamborine with an agent, so fingers crossed.
Good to hear that Richard and Marilyn are going to catch up with you soon. I do hope you can work your magic with them.
By the way, it must have been a fluke, but the only way I found you, was Googling on the internet for life/income insurance way back when - now look what you are doing for us!!
Must be karma - everything happens for a reason I suppose.
Have a nice day - it's freezing here!
Jackie
We only read of today that Medibank will pay a special dividend of 300m to the government to pay for the government’s election promises. Surely Medibank policy holders would prefer a reduction in the premium of maybe 8% to fund their own requirements. Let’s remember that medical insurance premiums are another taxx as almost compulsory.
There was some good news this week with the RBA arbitrarily deciding the cost of money would be 4.5%. This means to the mortgage holder that they would only pay another 1.9% commission to their bank for their debt. Why is this commission allowed? I.e. the rate for a variable mortgage would be about 7.4%. Why did this decision occur? It is simply that everyone else, be it families or companies have been deleveraging & reducing their debt levels & not spending. We see this in weak retail figures or the low share prices of the Harvey Normans & Woolies. We also see this in the estimated 1.3 Trillion sitting in cash accounts.
Can we hope to see these parties reduce their promises & their spending? We doubt it as it goes back to ‘my ego is bigger than yours’ & we can do ‘better’ & ‘care more’ than you do. It’s called soliciting [for your vote].
On the ‘spend-o-meter’ of Weekend Australia 31/07/10 we see the red party has promised 2.53BILLION & the blue gang has promised 4.1BILLION to allocate from you to others. Ok the blue team indicates they will save 42B by scrapping NBN. The green gang promises a price on carbon, a carbon taxx. There is more nonsense than Alice in Wonderland.
Why did the central bank decide that the cost of money should be the same? It believes there is no inflation or no price increases. Well tell that to the ‘working family’ who would like to ‘move forward’ but is unable to due to the heavy price increases in everything except seasonal vegetables.
Let’s also not forget ‘Bracket creep to hit one million Australian workers' pay packets’. It’s why we spell it taxx.
We suggest that the pied pipers might read ‘Seven steps to getting the country back on track’ from w/e Australian. We accept that there is legitimate country funding requirements.
Welcome to call us on 07 3848 1088 or email us on info@wecoachwealth.com.au or book via our websites www.wecoachwealth.com.au
John McAuliffe
Yes that’s why they are called parties. Life is a party if you are the pied piper of a political party. They are having a great time outdoing each other in showering the masses or is it the press gallery with gifts & snippets. It is the old game of ‘ours is bigger than yours’. They are also having a great time throwing mud at each other.
In fact with a sergeant at arms of a bikie gang on the cover of The Weekend Australian magazine recently there could be some similarities. Maybe these parties could be called gangs. We recall there was a so called ‘gang of four’. Could we have some state legislation to ban these gangs or parties from assembling in greater numbers than one? After all taxx is taken & allocated [wasted] in ways that you probably don’t agree with.
Hence we suggest to the ‘working family’ who needs to ‘move forward’ to read a recent email to us
Hey there John,
Anyways, yes, we have some small actions - I have asked my mother to move out of Mt Ridge, now I am doing a few odd jobs to fix the place up for renting - hopefully ready by end of Aug / Sept.
Am STILL working on my June BAS - naughty naughty - it was due 28/07, but our accountant tells me I have a week or so to get it to her.
We have put the feelers out to sell Tamborine with an agent, so fingers crossed.
Good to hear that Richard and Marilyn are going to catch up with you soon. I do hope you can work your magic with them.
By the way, it must have been a fluke, but the only way I found you, was Googling on the internet for life/income insurance way back when - now look what you are doing for us!!
Must be karma - everything happens for a reason I suppose.
Have a nice day - it's freezing here!
Jackie
We only read of today that Medibank will pay a special dividend of 300m to the government to pay for the government’s election promises. Surely Medibank policy holders would prefer a reduction in the premium of maybe 8% to fund their own requirements. Let’s remember that medical insurance premiums are another taxx as almost compulsory.
There was some good news this week with the RBA arbitrarily deciding the cost of money would be 4.5%. This means to the mortgage holder that they would only pay another 1.9% commission to their bank for their debt. Why is this commission allowed? I.e. the rate for a variable mortgage would be about 7.4%. Why did this decision occur? It is simply that everyone else, be it families or companies have been deleveraging & reducing their debt levels & not spending. We see this in weak retail figures or the low share prices of the Harvey Normans & Woolies. We also see this in the estimated 1.3 Trillion sitting in cash accounts.
Can we hope to see these parties reduce their promises & their spending? We doubt it as it goes back to ‘my ego is bigger than yours’ & we can do ‘better’ & ‘care more’ than you do. It’s called soliciting [for your vote].
On the ‘spend-o-meter’ of Weekend Australia 31/07/10 we see the red party has promised 2.53BILLION & the blue gang has promised 4.1BILLION to allocate from you to others. Ok the blue team indicates they will save 42B by scrapping NBN. The green gang promises a price on carbon, a carbon taxx. There is more nonsense than Alice in Wonderland.
Why did the central bank decide that the cost of money should be the same? It believes there is no inflation or no price increases. Well tell that to the ‘working family’ who would like to ‘move forward’ but is unable to due to the heavy price increases in everything except seasonal vegetables.
Let’s also not forget ‘Bracket creep to hit one million Australian workers' pay packets’. It’s why we spell it taxx.
We suggest that the pied pipers might read ‘Seven steps to getting the country back on track’ from w/e Australian. We accept that there is legitimate country funding requirements.
Welcome to call us on 07 3848 1088 or email us on info@wecoachwealth.com.au or book via our websites www.wecoachwealth.com.au
John McAuliffe
Submerging or Emerging
Submerging or Emerging
Submerging or Emerging was the title of a speech by Jonathon Pain from www.thepainreport.com.au at a recent fund manager presentation. It was a very simple but powerful explanation of where the global economy is & where it is heading.
Traditionally the global economy has been defined as ‘the haves’ & ‘the have nots’. I.e. the so called developed countries such as USA, Japan, and Western Europe, UK making up say the G8. Is there a common thread in government with these countries? Then there have been the so called emerging countries such as the BRIC countries of Brazil, Russia, India & China.
Jonathon pointed out the now obvious, that these ‘haves’ now ‘have’ so much debt to GNP that they are submerging in debt. The ‘have nots’ now are much less debt & hence have the facility to grow faster.
Some key points that arose from Jonathan’s presentation were;
Ø ‘Submerging’ economies will spend less and save more whilst ‘emerging’ economies will spend more and save less
Ø Emerging economies will continue to grow due to the shift in demographics (more people working), labour (more people earning wages and hence spending) and capital (more money circulating to develop infrastructure
It is the savers that are now maximising their wallets & buying up big. We note that Australian companies are being bought up by overseas companies keen to lock in the future. Hence we have seen a Singapore company buy CSR; a Thai company picks up a coal company, Indian & Chinese companies everywhere.
Where is Australia ‘the lucky country’ on this matter? This really is the choice that the electorate have facing them on Election Day.
Let’s recall that the ‘working family’ is ‘moving forward’ by reducing their debt levels where they can. This is shown up by the slowdown in retail spending & ‘home loans’ at a nine year low. What’s good enough for the gander should be good enough for the goose.
The above presentation was all about where the gander should invest in the future. Do we invest in the submerging economies or do we invest in the emerging economies. Let’s think about it.
The other debate for the August 21st is taxx. Do we need to debate it as surely you could do much more with your pay packet than some government department which may have wasted a Billion of taxx payer funds?
We observe that NZ across the ditch has made some taxx changes. Ire reduced company taxx to 28%, the top income taxx rate reduced to 33% and increased the GST to 15%. This is all so as to be competitive & to survive. Perhaps we could learn from them apart from the rugby. Don’t mention the rugby.
Let’s remember that companies pay dividends after they have paid expenses which include taxx. So simply if companies pay less taxx then they have a greater ability to grow their profits & hence their dividends. Isn’t a lower company taxx rate better for your retirement superannuation jar? We don’t understand where an MRRT would be better for our super but maybe we are labouring the point.
So where & what column did Jonathon place Australia. He did place it in the emerging column if only because it was not submerging in government debt. The choice we make at Election Day is whether Australia continues to emerge or is submerged.
As a topic within his speech Jonathon did mention the Chinese very fast train & how it would & did help growth within China. This could be something that could help Australia remain competitive. Brisbane to Sydney in 3 hours is faster than leaving for & leaving the air terminal.
We imagine & hope to do a very fast train from Singapore to London sometime.
If you want to emerge from your current financial position & not submerge in debt & taxx & invest in emerging economies then our active wealth strategy maybe for you.
Welcome to call on 07 3848 1088, email info@wealthcoach.net.au or visit our websites www.wecoachwealth.com.au
John McAuliffe
Submerging or Emerging was the title of a speech by Jonathon Pain from www.thepainreport.com.au at a recent fund manager presentation. It was a very simple but powerful explanation of where the global economy is & where it is heading.
Traditionally the global economy has been defined as ‘the haves’ & ‘the have nots’. I.e. the so called developed countries such as USA, Japan, and Western Europe, UK making up say the G8. Is there a common thread in government with these countries? Then there have been the so called emerging countries such as the BRIC countries of Brazil, Russia, India & China.
Jonathon pointed out the now obvious, that these ‘haves’ now ‘have’ so much debt to GNP that they are submerging in debt. The ‘have nots’ now are much less debt & hence have the facility to grow faster.
Some key points that arose from Jonathan’s presentation were;
Ø ‘Submerging’ economies will spend less and save more whilst ‘emerging’ economies will spend more and save less
Ø Emerging economies will continue to grow due to the shift in demographics (more people working), labour (more people earning wages and hence spending) and capital (more money circulating to develop infrastructure
It is the savers that are now maximising their wallets & buying up big. We note that Australian companies are being bought up by overseas companies keen to lock in the future. Hence we have seen a Singapore company buy CSR; a Thai company picks up a coal company, Indian & Chinese companies everywhere.
Where is Australia ‘the lucky country’ on this matter? This really is the choice that the electorate have facing them on Election Day.
Let’s recall that the ‘working family’ is ‘moving forward’ by reducing their debt levels where they can. This is shown up by the slowdown in retail spending & ‘home loans’ at a nine year low. What’s good enough for the gander should be good enough for the goose.
The above presentation was all about where the gander should invest in the future. Do we invest in the submerging economies or do we invest in the emerging economies. Let’s think about it.
The other debate for the August 21st is taxx. Do we need to debate it as surely you could do much more with your pay packet than some government department which may have wasted a Billion of taxx payer funds?
We observe that NZ across the ditch has made some taxx changes. Ire reduced company taxx to 28%, the top income taxx rate reduced to 33% and increased the GST to 15%. This is all so as to be competitive & to survive. Perhaps we could learn from them apart from the rugby. Don’t mention the rugby.
Let’s remember that companies pay dividends after they have paid expenses which include taxx. So simply if companies pay less taxx then they have a greater ability to grow their profits & hence their dividends. Isn’t a lower company taxx rate better for your retirement superannuation jar? We don’t understand where an MRRT would be better for our super but maybe we are labouring the point.
So where & what column did Jonathon place Australia. He did place it in the emerging column if only because it was not submerging in government debt. The choice we make at Election Day is whether Australia continues to emerge or is submerged.
As a topic within his speech Jonathon did mention the Chinese very fast train & how it would & did help growth within China. This could be something that could help Australia remain competitive. Brisbane to Sydney in 3 hours is faster than leaving for & leaving the air terminal.
We imagine & hope to do a very fast train from Singapore to London sometime.
If you want to emerge from your current financial position & not submerge in debt & taxx & invest in emerging economies then our active wealth strategy maybe for you.
Welcome to call on 07 3848 1088, email info@wealthcoach.net.au or visit our websites www.wecoachwealth.com.au
John McAuliffe
Do you know what assume means
Do you know what assume means?
Do you know what assume means was a question a builder client asked us sometime ago?
We had to admit then that we didn’t know & so a brief translation was provided and starts off as ‘the mother of all’.
This has been the recurrent & comment mistake by government over recent times & something we never do with our spouse. I.e. we assume that all our taxx is well spent and the banks are as safe as houses & Kevin Flip flop is action what he spins a promise.
I.e. assume that property always goes up. Have we all forgotten all of that frozen funds in property trusts. Lets recall Centro which was the lead player before the GFC & was in fact in ‘the too big to fail’ category. Yes this is commercial property, such as retail office & offices. The banks are propping these funds up as otherwise the banks will need propping up. We have no expectations of residential prices doing other than a similar slide as elsewhere on the planet. Why else are we any different.
So we see from the Henry report the assumption that mining companies will pay a 40% super profits taxx RSPT as it will be good for your superannuation & infrastructure & whatever. That is a very big assumption as so far all super funds with any exposure to resources stocks have fallen 15%+. Thanks heaps. Ross Garnaut of Lihir & an economist was also questioning the treasury assumptions. One of them is China will continually grow & need our resources.
A big assumption is that this RSPT will kick in once companies earn over the risk free rate of 6 %. Risk free is benchmarked to government bond rate. We only need to read of ‘sovereign risk’ in Europe to be very aware that this risk has significantly increased. We attended a presentation by a fund manager recently that showed a slide of a Fosters bond being better priced i.e. less risk than that the Australian government bond in February this year.
We all assume that the health system which is a bottomless pit will look after us in our time of need. We are sorry but there are too many examples of a failing health system which takes a disproportionate share of everyone’s dollar. Yes there are some great emotional & success stories which we have commented on before such as road trauma & premature infants. In general there is a gap either in time or money that you have to find.
We only had this week an example with a client needing shoulder surgery. The estimated cost is 40k which Work Cover will pay. Work cover always needs serious convincing in such matters & it is even less likely for a major medical trauma. Hence you may need a solution for that & welcome to call us as we have two separate ideas on that. One of those is at a seminar in Brisbane on June 21st with a Collette Larsen who has an incredible health & income story. Welcome to call on 07 3848 1088 or email for free tickets.
As it is now June then it is time to act & do something on your taxx before June 30. We have made the above comments because you can safely assume that your taxx will be wasted. There is almost always something to be actioned before June 30.
If you find that more than too much of your money goes to Taxx you wouldn’t want the standard deduction the government wants to allow.
At some stage Australia could wake up & read what the new UK government read i.e. ‘sorry but no money left’.
At least A. Robb [an appropriate name] commented in the budget reply after Joe lopped 42B off that ‘we can’t afford it’. That’s a start with an attitude change although Tony the loose cannon could also be very loose with your taxx.
The other chunk of your after taxx income may go to your mortgage. Then of course it time to act as one client has this week.
“Hi John,
Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.
Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.
It is difficult for us to get down to see you from Dalby for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).
I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.
How does that sound?
Thanks in advance for your assistance,
Jackie”
So if you need to reduce your taxx before June 30 or that mortgage is so big it is stressing you or you want to protect the downside then call on 3848 1088 or email as we have 26 years of happy clients. We have an elegant & simple strategy to achieve your goals.
Assuming all is good means you will end up as you are or maybe ‘the mother of all’.
John McAuliffe
Do you know what assume means was a question a builder client asked us sometime ago?
We had to admit then that we didn’t know & so a brief translation was provided and starts off as ‘the mother of all’.
This has been the recurrent & comment mistake by government over recent times & something we never do with our spouse. I.e. we assume that all our taxx is well spent and the banks are as safe as houses & Kevin Flip flop is action what he spins a promise.
I.e. assume that property always goes up. Have we all forgotten all of that frozen funds in property trusts. Lets recall Centro which was the lead player before the GFC & was in fact in ‘the too big to fail’ category. Yes this is commercial property, such as retail office & offices. The banks are propping these funds up as otherwise the banks will need propping up. We have no expectations of residential prices doing other than a similar slide as elsewhere on the planet. Why else are we any different.
So we see from the Henry report the assumption that mining companies will pay a 40% super profits taxx RSPT as it will be good for your superannuation & infrastructure & whatever. That is a very big assumption as so far all super funds with any exposure to resources stocks have fallen 15%+. Thanks heaps. Ross Garnaut of Lihir & an economist was also questioning the treasury assumptions. One of them is China will continually grow & need our resources.
A big assumption is that this RSPT will kick in once companies earn over the risk free rate of 6 %. Risk free is benchmarked to government bond rate. We only need to read of ‘sovereign risk’ in Europe to be very aware that this risk has significantly increased. We attended a presentation by a fund manager recently that showed a slide of a Fosters bond being better priced i.e. less risk than that the Australian government bond in February this year.
We all assume that the health system which is a bottomless pit will look after us in our time of need. We are sorry but there are too many examples of a failing health system which takes a disproportionate share of everyone’s dollar. Yes there are some great emotional & success stories which we have commented on before such as road trauma & premature infants. In general there is a gap either in time or money that you have to find.
We only had this week an example with a client needing shoulder surgery. The estimated cost is 40k which Work Cover will pay. Work cover always needs serious convincing in such matters & it is even less likely for a major medical trauma. Hence you may need a solution for that & welcome to call us as we have two separate ideas on that. One of those is at a seminar in Brisbane on June 21st with a Collette Larsen who has an incredible health & income story. Welcome to call on 07 3848 1088 or email for free tickets.
As it is now June then it is time to act & do something on your taxx before June 30. We have made the above comments because you can safely assume that your taxx will be wasted. There is almost always something to be actioned before June 30.
If you find that more than too much of your money goes to Taxx you wouldn’t want the standard deduction the government wants to allow.
At some stage Australia could wake up & read what the new UK government read i.e. ‘sorry but no money left’.
At least A. Robb [an appropriate name] commented in the budget reply after Joe lopped 42B off that ‘we can’t afford it’. That’s a start with an attitude change although Tony the loose cannon could also be very loose with your taxx.
The other chunk of your after taxx income may go to your mortgage. Then of course it time to act as one client has this week.
“Hi John,
Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.
Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.
It is difficult for us to get down to see you from Dalby for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).
I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.
How does that sound?
Thanks in advance for your assistance,
Jackie”
So if you need to reduce your taxx before June 30 or that mortgage is so big it is stressing you or you want to protect the downside then call on 3848 1088 or email as we have 26 years of happy clients. We have an elegant & simple strategy to achieve your goals.
Assuming all is good means you will end up as you are or maybe ‘the mother of all’.
John McAuliffe
Mick and I would be keen to have you offer us advice on how to better structure our loans etc
“Hi John,
Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.
Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.
It is difficult for us to get down seeing you for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).
I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.
How does that sound?
Thanks in advance for your assistance,
Jackie”
Why is this so?
In our discussions they commented that they ‘understood property’ & they ‘liked renovating them’ and ‘buying low’ meant that they should make capital gains. These are very good reasons but they haven’t done back of the envelope cash flows which is why to use Michael’s phrase ‘they are robbing Peter to pay Peter.’
[Julia could use the same phrase with the MRRT and SPRT]
Let’s look at a rental property scenario with a house value say 400K
Debt on it of say 75% i.e. 300K @ 7.4% interest only means -22,000
Costs as rates + insurance + RE fees + 1%-2% maintainence at least = - 8,000
Rent which always should be higher say 350pw +17,500
I.e. a gross negative cashflow of 12,500
How much is this over 5 years = $62,500 which must be made up.
Good luck as the real estate agent is ~3% = 12K+ & the government wants its share 50% of the nominal gain. Michael & Jackie & all others are hoping for a sizable gain to have a residual capital gain left for them. It isn’t worth the risk or the reduced lifestyle now.
What if the rental was empty for a long period? How much does that cost & where does the cashflow come from? What if 2 properties were not rented for a period?
Mick & Jackie need to restructure their debts using our active wealth strategy.
We had other discussions this week.
Noel wanted some 800,000 life insurance & so we ran off the top 18 company rates for his age of 48. In our discussions he asked ‘did we have a strategy so that he could retire his current income’. That’s a challenge when he has 2 children & still a debt of 180K. This is a very common problem out there. He at least knows his position & doesn’t like the outlook. Our active wealth strategy may help if he has a positive risk profile & doesn’t want to be ‘the frog in the jug’.
Of course the regulators in their wisdom want him to rely on them. Does he?
We had Will call us after being referred by another happy client. Will has a 245K mortgage & was also aged 48. However he had 16K on credit cards & very concerned that he would be in the same financial position & debt when he retired. A different solution is required & we need to maximise the second income with some discipline.
We had Tony comment after 6 weeks in Turkey enjoying hot air ballooning & holidaying. He admitted that 3 years ago he came to the conclusion that would never own another house in his lifetime. He couldn’t afford to buy the $1m+ house which his lifestyle wanted. However he could afford to rent it. Any landlord is going to be better than a bank as a landlord. What Tony is doing is saving all those extra costs of house ownership such as rates & maintainence & using our active wealth strategy.
I.e. let’s revisit if we need a house.
We had from Lianne today after emailing her monthly HW.
‘Back from our walkabout – it was fantastic’ and ‘we did 3 week trip including Lake Eyre and Uluru and other sites along the way – tenting it!
Come back to make sure we can go again for longer and’ Also did a crossing of the Simpson Desert west to east’.
Lianne can do this as they have reduced their large mortgage over time to a nominal 34k bad debt today. They are so happy with us they wanted off the satin drugs they were on for our active health prevention strategy which also everyone needs.
As these are not uncommon scenarios then we invite you to call on 07 3848 1088 or email us or visit our websites. Our active wealth strategy may be worth lunching over.
John McAuliffe
“Hi John,
Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.
Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.
It is difficult for us to get down seeing you for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).
I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.
How does that sound?
Thanks in advance for your assistance,
Jackie”
Why is this so?
In our discussions they commented that they ‘understood property’ & they ‘liked renovating them’ and ‘buying low’ meant that they should make capital gains. These are very good reasons but they haven’t done back of the envelope cash flows which is why to use Michael’s phrase ‘they are robbing Peter to pay Peter.’
[Julia could use the same phrase with the MRRT and SPRT]
Let’s look at a rental property scenario with a house value say 400K
Debt on it of say 75% i.e. 300K @ 7.4% interest only means -22,000
Costs as rates + insurance + RE fees + 1%-2% maintainence at least = - 8,000
Rent which always should be higher say 350pw +17,500
I.e. a gross negative cashflow of 12,500
How much is this over 5 years = $62,500 which must be made up.
Good luck as the real estate agent is ~3% = 12K+ & the government wants its share 50% of the nominal gain. Michael & Jackie & all others are hoping for a sizable gain to have a residual capital gain left for them. It isn’t worth the risk or the reduced lifestyle now.
What if the rental was empty for a long period? How much does that cost & where does the cashflow come from? What if 2 properties were not rented for a period?
Mick & Jackie need to restructure their debts using our active wealth strategy.
We had other discussions this week.
Noel wanted some 800,000 life insurance & so we ran off the top 18 company rates for his age of 48. In our discussions he asked ‘did we have a strategy so that he could retire his current income’. That’s a challenge when he has 2 children & still a debt of 180K. This is a very common problem out there. He at least knows his position & doesn’t like the outlook. Our active wealth strategy may help if he has a positive risk profile & doesn’t want to be ‘the frog in the jug’.
Of course the regulators in their wisdom want him to rely on them. Does he?
We had Will call us after being referred by another happy client. Will has a 245K mortgage & was also aged 48. However he had 16K on credit cards & very concerned that he would be in the same financial position & debt when he retired. A different solution is required & we need to maximise the second income with some discipline.
We had Tony comment after 6 weeks in Turkey enjoying hot air ballooning & holidaying. He admitted that 3 years ago he came to the conclusion that would never own another house in his lifetime. He couldn’t afford to buy the $1m+ house which his lifestyle wanted. However he could afford to rent it. Any landlord is going to be better than a bank as a landlord. What Tony is doing is saving all those extra costs of house ownership such as rates & maintainence & using our active wealth strategy.
I.e. let’s revisit if we need a house.
We had from Lianne today after emailing her monthly HW.
‘Back from our walkabout – it was fantastic’ and ‘we did 3 week trip including Lake Eyre and Uluru and other sites along the way – tenting it!
Come back to make sure we can go again for longer and’ Also did a crossing of the Simpson Desert west to east’.
Lianne can do this as they have reduced their large mortgage over time to a nominal 34k bad debt today. They are so happy with us they wanted off the satin drugs they were on for our active health prevention strategy which also everyone needs.
As these are not uncommon scenarios then we invite you to call on 07 3848 1088 or email us or visit our websites. Our active wealth strategy may be worth lunching over.
John McAuliffe
Do you know what assume means?
Do you know what assume means?
Do you know what assume means was a question a builder client asked us sometime ago?
We had to admit then that we didn’t know & so a brief translation was provided and starts off as ‘the mother of all’.
This has been the recurrent & comment mistake by government over recent times & something we never do with our spouse. I.e. we assume that all our taxx is well spent and the banks are as safe as houses & Kevin Flip flop is action what he spins a promise.
I.e. assume that property always goes up. Have we all forgotten all of that frozen funds in property trusts. Lets recall Centro which was the lead player before the GFC & was in fact in ‘the too big to fail’ category. Yes this is commercial property, such as retail office & offices. The banks are propping these funds up as otherwise the banks will need propping up. We have no expectations of residential prices doing other than a similar slide as elsewhere on the planet. Why else are we any different.
So we see from the Henry report the assumption that mining companies will pay a 40% super profits taxx RSPT as it will be good for your superannuation & infrastructure & whatever. That is a very big assumption as so far all super funds with any exposure to resources stocks have fallen 15%+. Thanks heaps. Ross Garnaut of Lihir & an economist was also questioning the treasury assumptions. One of them is China will continually grow & need our resources.
A big assumption is that this RSPT will kick in once companies earn over the risk free rate of 6 %. Risk free is benchmarked to government bond rate. We only need to read of ‘sovereign risk’ in Europe to be very aware that this risk has significantly increased. We attended a presentation by a fund manager recently that showed a slide of a Fosters bond being better priced i.e. less risk than that the Australian government bond in February this year.
We all assume that the health system which is a bottomless pit will look after us in our time of need. We are sorry but there are too many examples of a failing health system which takes a disproportionate share of everyone’s dollar. Yes there are some great emotional & success stories which we have commented on before such as road trauma & premature infants. In general there is a gap either in time or money that you have to find.
We only had this week an example with a client needing shoulder surgery. The estimated cost is 40k which Work Cover will pay. Work cover always needs serious convincing in such matters & it is even less likely for a major medical trauma. Hence you may need a solution for that & welcome to call us as we have two separate ideas on that. One of those is at a seminar in Brisbane on June 21st with a Collette Larsen who has an incredible health & income story. Welcome to call on 07 3848 1088 or email for free tickets.
As it is now June then it is time to act & do something on your taxx before June 30. We have made the above comments because you can safely assume that your taxx will be wasted. There is almost always something to be actioned before June 30.
If you find that more than too much of your money goes to Taxx you wouldn’t want the standard deduction the government wants to allow.
At some stage Australia could wake up & read what the new UK government read i.e. ‘sorry but no money lef’.
At least A. Robb [an appropriate name] commented in the budget reply after Joe lopped 42B off that ‘we can’t afford it’. That’s a start with an attitude change although Tony the loose cannon could also be very loose with your taxx.
The other chunk of your after taxx income may go to your mortgage. Then of course it time to act as one client has this week.
“Hi John,
Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.
Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.
It is difficult for us to get down to see you from Dalby for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).
I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.
How does that sound?
Thanks in advance for your assistance,
Jackie”
So if you need to reduce your taxx before June 30 or that mortgage is so big it is stressing you or you want to protect the downside then call on 3848 1088 or email as we have 26 years of happy clients. We have an elegant & simple strategy to achieve your goals.
Assuming all is good means you will end up as you are or maybe ‘the mother of all’.
John McAuliffe
Do you know what assume means was a question a builder client asked us sometime ago?
We had to admit then that we didn’t know & so a brief translation was provided and starts off as ‘the mother of all’.
This has been the recurrent & comment mistake by government over recent times & something we never do with our spouse. I.e. we assume that all our taxx is well spent and the banks are as safe as houses & Kevin Flip flop is action what he spins a promise.
I.e. assume that property always goes up. Have we all forgotten all of that frozen funds in property trusts. Lets recall Centro which was the lead player before the GFC & was in fact in ‘the too big to fail’ category. Yes this is commercial property, such as retail office & offices. The banks are propping these funds up as otherwise the banks will need propping up. We have no expectations of residential prices doing other than a similar slide as elsewhere on the planet. Why else are we any different.
So we see from the Henry report the assumption that mining companies will pay a 40% super profits taxx RSPT as it will be good for your superannuation & infrastructure & whatever. That is a very big assumption as so far all super funds with any exposure to resources stocks have fallen 15%+. Thanks heaps. Ross Garnaut of Lihir & an economist was also questioning the treasury assumptions. One of them is China will continually grow & need our resources.
A big assumption is that this RSPT will kick in once companies earn over the risk free rate of 6 %. Risk free is benchmarked to government bond rate. We only need to read of ‘sovereign risk’ in Europe to be very aware that this risk has significantly increased. We attended a presentation by a fund manager recently that showed a slide of a Fosters bond being better priced i.e. less risk than that the Australian government bond in February this year.
We all assume that the health system which is a bottomless pit will look after us in our time of need. We are sorry but there are too many examples of a failing health system which takes a disproportionate share of everyone’s dollar. Yes there are some great emotional & success stories which we have commented on before such as road trauma & premature infants. In general there is a gap either in time or money that you have to find.
We only had this week an example with a client needing shoulder surgery. The estimated cost is 40k which Work Cover will pay. Work cover always needs serious convincing in such matters & it is even less likely for a major medical trauma. Hence you may need a solution for that & welcome to call us as we have two separate ideas on that. One of those is at a seminar in Brisbane on June 21st with a Collette Larsen who has an incredible health & income story. Welcome to call on 07 3848 1088 or email for free tickets.
As it is now June then it is time to act & do something on your taxx before June 30. We have made the above comments because you can safely assume that your taxx will be wasted. There is almost always something to be actioned before June 30.
If you find that more than too much of your money goes to Taxx you wouldn’t want the standard deduction the government wants to allow.
At some stage Australia could wake up & read what the new UK government read i.e. ‘sorry but no money lef’.
At least A. Robb [an appropriate name] commented in the budget reply after Joe lopped 42B off that ‘we can’t afford it’. That’s a start with an attitude change although Tony the loose cannon could also be very loose with your taxx.
The other chunk of your after taxx income may go to your mortgage. Then of course it time to act as one client has this week.
“Hi John,
Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.
Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.
It is difficult for us to get down to see you from Dalby for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).
I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.
How does that sound?
Thanks in advance for your assistance,
Jackie”
So if you need to reduce your taxx before June 30 or that mortgage is so big it is stressing you or you want to protect the downside then call on 3848 1088 or email as we have 26 years of happy clients. We have an elegant & simple strategy to achieve your goals.
Assuming all is good means you will end up as you are or maybe ‘the mother of all’.
John McAuliffe
What did Barnaby say? What have we learnt as we turn 60?
What did Barnaby say?
What have we learnt as we turn 60?
We had to check ourselves when last weekend we heard Barnaby say ‘They have got lovers’ fingers, every thing they touch smells’. We could never have imagined an accountant with we believe three daughters make such an earthy comment on the ‘Henry report’.
When it was followed up with a similar earthy comment from another commentator on PM agenda that ‘the others on the Henry report must have felt they had had a one night stand & must feel slightly used’ then there is a general & genuine feeling of mistrust with all big we know better governments.
There is the unholy Trinity with Kevin Flip Flop bringing out that rent resources super taxx on the miners. It is a taxx on super profits. A super profit apparently occurs when one exceeds the long term = 10 year risk free government bond rate.
Let’s listen to Kevin Flip Flop as he explains it.
Lets all put our money in government bonds because at the rate of government borrowing we are all going to have to so as to sustain big brother government largess to the masses. Greece & Europe & US & UK here we come. There is no reason at all for anyone to risk their money in any investment or activity if there is no incentive. Who said government bonds are risk free & hence we have sovereign risk to add to market volatility.
And what perfect timing so as to whack the values of everyone’s retirement nest egg.
Here is one email we received this week & Jean is not a client.
Hi John
I really do need your advice now as I have managed funds with Colonial First State in Global Resources which is in the mining sector and with the government’s introduction of 40% of the profits to be taken to fund the increase in Super I am concerned about what I need to do.
My phone number is XXX
Thanks
Jean
And today’s client email
Hi John,
I'll be away from 12 May - 27 June so I'd be glad to catch up sometime in mid- July.
I've attached April homework.
Thanks for your advice this year. It's been very predictive of what has happened. It looks like the PIIGS can't fly. Hope the euro stays down but not the market.
Regards
Kerry
Why would anyone in their right mind contribute any more money into superannuation when its going to be destroyed as it has in the last week? They are only going to because they have to. Therefore it’s a taxx because you can’t spend it & you have the choice of government with their proposed low cost low return fund or if they had their way an industry fund. If you don’t vote Labour then why are you in an industry fund? They are not a charity & who pays for all their advertising. You certainly wouldn’t want their advice. However we remember Don Chipp phrase & it’s why they want us out.
We have also been given the next blow to the family budget by the RBA who increased the cash rate to 4.5% & hence your mortgage rate to close to 7 %. Where is a family going to find that extra $50pw? Hence they are closer to mortgage stress as are 90,000 others. The banks don’t want that because that means selling & hence down go house prices. This is what has happened everywhere else globally.
Of course the banks had their semiannual results which gave Kevin Flip Flop the opportunity to pass the heat off him & onto the banks. It was so predictable. Then there was the suggestion that maybe the banks should be also super taxed. This could be argued as they have been ‘gouging’ on the back of the government guarantee. Where again does your super invest in & what is that going to do to your retirement values.
Then we read that customers are unhappy with their banks. Well it is always possible to change banks & we do offer better rates through our preferred partner. Give us a call on 07 3848 1088 or an email.
We could attempt to list the other big government knows better stimulus spending failures. Those that come to mind are the rort of the insulation & the Julia’s BER schools programme, the flip flop on the ETS, the destroying of TLS share price with the 42B +/-NBN which only 30% may subscribe to, 100m on swine flu …. It’s your money that is wasted.
Taxx kills growth & hence you have lost wealth, taxxes won’t reduce & interest rates will continue up by another 0.5%.
The other side is no different as the coalition spent 93% of it revenues. All government can’t help themselves & the Western model of government promises is breaking down as it is a Ponzi scheme.
We are more comfortable with the Norwegian model where the taxxes on oil goes into a separate ‘Future Fund’ & away from big government hands. The Swiss also have an idea where the new migrants only pay 10% flat taxx but have no entitlement to health or social security.
We understand that Kevin Flip speaks Mandarin & hence he might understand why China is in the position it is. Simply it saves. E.g. A huge % of new property is bought with no borrowing. However a China bubble is due to burst.
Our thoughts on turning 60 today is that daughters fib but the big boys lie & don’t ever confuse wants with needs.
Other events today are Naplan & we ask Julia why it will take months before our daughter’s results are known. Julia & the teachers flip flopped this week also. We have swan bumps in anticipation of Wayne’s platitudes.
We must play as the coach Robbie Deans says. ‘Play what’s in front of you’. Your taxx is not going to be any smaller & nor is your mortgage rate. Hence we offer our active wealth strategy which reduces both as you need to play the game. Of course you can always leave the country which many contemplate & sometime act.
Welcome to call, email or visit our websites if you are unhappy with your current financial progress.
There is always some financial tuning possible before June 30.
John McAuliffe
What have we learnt as we turn 60?
We had to check ourselves when last weekend we heard Barnaby say ‘They have got lovers’ fingers, every thing they touch smells’. We could never have imagined an accountant with we believe three daughters make such an earthy comment on the ‘Henry report’.
When it was followed up with a similar earthy comment from another commentator on PM agenda that ‘the others on the Henry report must have felt they had had a one night stand & must feel slightly used’ then there is a general & genuine feeling of mistrust with all big we know better governments.
There is the unholy Trinity with Kevin Flip Flop bringing out that rent resources super taxx on the miners. It is a taxx on super profits. A super profit apparently occurs when one exceeds the long term = 10 year risk free government bond rate.
Let’s listen to Kevin Flip Flop as he explains it.
Lets all put our money in government bonds because at the rate of government borrowing we are all going to have to so as to sustain big brother government largess to the masses. Greece & Europe & US & UK here we come. There is no reason at all for anyone to risk their money in any investment or activity if there is no incentive. Who said government bonds are risk free & hence we have sovereign risk to add to market volatility.
And what perfect timing so as to whack the values of everyone’s retirement nest egg.
Here is one email we received this week & Jean is not a client.
Hi John
I really do need your advice now as I have managed funds with Colonial First State in Global Resources which is in the mining sector and with the government’s introduction of 40% of the profits to be taken to fund the increase in Super I am concerned about what I need to do.
My phone number is XXX
Thanks
Jean
And today’s client email
Hi John,
I'll be away from 12 May - 27 June so I'd be glad to catch up sometime in mid- July.
I've attached April homework.
Thanks for your advice this year. It's been very predictive of what has happened. It looks like the PIIGS can't fly. Hope the euro stays down but not the market.
Regards
Kerry
Why would anyone in their right mind contribute any more money into superannuation when its going to be destroyed as it has in the last week? They are only going to because they have to. Therefore it’s a taxx because you can’t spend it & you have the choice of government with their proposed low cost low return fund or if they had their way an industry fund. If you don’t vote Labour then why are you in an industry fund? They are not a charity & who pays for all their advertising. You certainly wouldn’t want their advice. However we remember Don Chipp phrase & it’s why they want us out.
We have also been given the next blow to the family budget by the RBA who increased the cash rate to 4.5% & hence your mortgage rate to close to 7 %. Where is a family going to find that extra $50pw? Hence they are closer to mortgage stress as are 90,000 others. The banks don’t want that because that means selling & hence down go house prices. This is what has happened everywhere else globally.
Of course the banks had their semiannual results which gave Kevin Flip Flop the opportunity to pass the heat off him & onto the banks. It was so predictable. Then there was the suggestion that maybe the banks should be also super taxed. This could be argued as they have been ‘gouging’ on the back of the government guarantee. Where again does your super invest in & what is that going to do to your retirement values.
Then we read that customers are unhappy with their banks. Well it is always possible to change banks & we do offer better rates through our preferred partner. Give us a call on 07 3848 1088 or an email.
We could attempt to list the other big government knows better stimulus spending failures. Those that come to mind are the rort of the insulation & the Julia’s BER schools programme, the flip flop on the ETS, the destroying of TLS share price with the 42B +/-NBN which only 30% may subscribe to, 100m on swine flu …. It’s your money that is wasted.
Taxx kills growth & hence you have lost wealth, taxxes won’t reduce & interest rates will continue up by another 0.5%.
The other side is no different as the coalition spent 93% of it revenues. All government can’t help themselves & the Western model of government promises is breaking down as it is a Ponzi scheme.
We are more comfortable with the Norwegian model where the taxxes on oil goes into a separate ‘Future Fund’ & away from big government hands. The Swiss also have an idea where the new migrants only pay 10% flat taxx but have no entitlement to health or social security.
We understand that Kevin Flip speaks Mandarin & hence he might understand why China is in the position it is. Simply it saves. E.g. A huge % of new property is bought with no borrowing. However a China bubble is due to burst.
Our thoughts on turning 60 today is that daughters fib but the big boys lie & don’t ever confuse wants with needs.
Other events today are Naplan & we ask Julia why it will take months before our daughter’s results are known. Julia & the teachers flip flopped this week also. We have swan bumps in anticipation of Wayne’s platitudes.
We must play as the coach Robbie Deans says. ‘Play what’s in front of you’. Your taxx is not going to be any smaller & nor is your mortgage rate. Hence we offer our active wealth strategy which reduces both as you need to play the game. Of course you can always leave the country which many contemplate & sometime act.
Welcome to call, email or visit our websites if you are unhappy with your current financial progress.
There is always some financial tuning possible before June 30.
John McAuliffe